A Comparison Of Solar Technologies And What They Mean For Companies

November 30th, 2012 by Trefis Team
+258.48%
Upside
2.25
Market
8.05
Trefis
SPWR: Sunpower logo
SPWR
Sunpower

The solar sector has been facing difficult times due to chronic oversupply of panels and a weak pricing environment. This has prompted photovoltaic (PV) manufacturers to focus on improving their technology and reducing costs to develop a competitive advantage. Most solar panels sold today are either monocrystalline, polycrystalline or thin-film based, depending on the material used to fabricate the cells used in the panels. In this article, we review various panel technologies employed by solar firms and analyze their costs, benefits and disadvantages and where it places them in the broader scheme of things within the solar industry.

What Are The Specifications That Impact The Purchase Decision

Conversion efficiency is perhaps the most prominent specification of a solar panel. It measures the percentage of sunlight that falls on a panel that gets converted into electricity. Higher efficiency panels occupy a smaller area for every unit of energy that they generate. Higher efficiency panels do not necessarily mean better value or better output per dollar spent. Given that solar energy is free and abundant, there are no recurring losses that are incurred by installing a lower efficiency solar panel. Higher efficiency matters when space is at a premium, particularly for applications like residential rooftops. From the standpoint of manufacturers, improving efficiency could help to reduce costs as a lower amount of material is required to manufacture every watt of capacity.

Relevant Articles
  1. Gap Stock Almost Flat This Year, What’s Next?
  2. With Smartphone Market Recovering, What To Expect From Qualcomm’s Q2 Results?
  3. Will United Airlines Stock Continue To See Higher Levels After A 20% Rise Post Upbeat Q1?
  4. Up 8% This Year, Why Is Costco Stock Outperforming?
  5. Down 7% In A Day, Where Is Travelers Stock Headed?
  6. What’s Next For Johnson & Johnson Stock After Beating Q1 Earnings?

The reliability of panels is another factor that customers care about since panel efficiency typically degrades with age, converting a lower amount of sunlight into electricity over the panel’s life. Solar manufacturers typically provide warranties against performance degradation. Apart from this, buyers also care about aesthetics and the performance of panels at various temperatures and at a variety of lighting conditions.

1) Monocrystalline Panels

What Do They Offer?

Monocrystalline panels offer the highest efficiency and the best aesthetics among various technologies. Monocrystalline solar cells are manufactured from single crystal silicon and combined into an array to form a solar panel. This technology is particularly valuable in densely populated areas and rooftops due to its smaller surface area per watt. These panels typically perform better in cooler climate conditions and are generally heavier compared to thin film panels. They offer better durability against the elements and their performance typically experience lower degradation as they age. Manufacturers typically offer a 25-year performance guarantee.

Who Are The Largest Manufacturers?

Sunpower is the most prominent monocrystalline panel manufacturer. The efficiencies of some of its high end panels approaches 20%. [1] As of last year, Sunpower panels had an average production cost per watt of about $1.45/watt with costs expected to decline to $1.10 by the end of the year. Chinese firms like Yingli Green Energy and Suntech Power have also begun manufacturing monocrystalline panels, although their panels offer lower efficiency.

What Are The Target Markets?

These panels are typically more expensive making them best suited for smaller scale applications where real estate is at a premium. Rooftop markets in Japan and Europe offer plenty of opportunity for growth. Monocrystalline panels also find application in utility scale projects due to their durability, although they could drive up project costs.

2) Polycrystalline Panels

What Do  They Offer?

These are currently the most popular variety of solar panels and it’s easy to see why. These panels hit the sweet spot when it comes to price vs. performance for most customers as they are slightly less efficient than monocrystalline modules but offer similar characteristics in terms of longer life and good durability. On the price front, however, polycrystalline panels have a strong advantage since the price of polysilicon, the primary raw material used to make silicon cells, has declined by about 90% over the last four years. This has allowed manufacturers to significantly prune down costs allowing them to compete directly with thin film panels. Module efficiencies typically range by manufacturer and product line but are typically between 13% and 17%.

Who Are The Largest Manufacturers?

Most of the polycrystalline panel manufacturing is now located in China. Large manufacturers include Yingli Green Energy (NYSE:YGE), Suntech Power (NYSE:STP), LDK Solar (NYSE:LDK) and Trina Solar (NYSE:TSL). Manufacturing costs for these modules stand at around 70 cents on average for Chinese manufacturers, making them cheaper compared to monocrystalline products.
What Are The Target Markets?

These panels find a wide range of applications from residential to utility scale projects due to their balanced price to performance trade-off. However, they could face some pressure if prices of monocrystalline panels were to drop.

3) Thin Film Panels

What Does They Offer?

Thin-film panels incorporate materials like amorphous silicon, cadmium telluride, and copper indium gallium selenide to manufacture panels. This technology drastically cuts down on the use of photovoltaic material like silicon by depositing a very thin layer of PV material over a sheet of metal or glass. They have traditionally had the advantage of lowest price per watt, however, the rapidly declining prices of polycrystalline panels are making it increasingly difficult for them to compete in the rooftop market.

Thin film panels are lighter and also perform better under a variety of lighting conditions like cloudy weather compared to silicon based panels. However, their performance degrades more over time compared to silicon panels .

Who Are The Largest Manufacturers?

First Solar (NASDAQ: FSLR) is the world’s largest thin film panel manufacturer. First Solar has manufacturing costs of about $0.67 per watt which are very marginally lower than some of the polycrystalline modules. Conversion efficiencies for First Solar panels were around 12.7% [2]
What Are The Target Markets?

Thin film manufacturers are carving  out a niche for themselves in the utility sector where space is not a constraint and panels need to perform under a variety of lighting conditions. These panels also find favor in regions like the Middle East, Africa and India which experience high temperatures. Given that the thin-film technology has been evolving rapidly, it could only be a matter of time before they compete more directly with silicon panels in the rooftop space.

Understand how a company’s products impact its stock price on Trefis

Notes:
  1. Sunpower Website [↩]
  2. First Solar Q3 Earnings Call Transcript, Seeking Alpha [↩]